Reflation play intact

Oil, natural gas, commodities, copper, and 30-year T-bond yields are all up big, so I took some profits off the table. Long-term treasury bonds are looking really shaky, so the TBT trade was profitable. I'm hoping we get a correction--even if it means I lose some money, because if we don't, whatever recovery we hope to have will be toast. Having said that, most of the reflation trade is still in play, despite any looming correction, as the long-term trend is high inflation--despite the government's efforts to downplay it. If there's only one thing to learn from this financial crisis, it's not to trust central bankers. The last 2 years should have cleared any doubts.

The Chinese are shunning T-bonds as I predicted, and opting for gold, base metals, energy and commodities as they rebuild their domestic and export economy. Expect the yield curve to steepen long-term, as it has since December.

The S & P 500 at 920 and Dow Jones Industrials look heavy here, after a big 30% run up. The fundamentals of our economy are still terrible--rising consumer debt defaults, rising jumbo loan mortgage foreclosures, rising commercial real estate defaults, and toxic assets being shoved under the rug with sketchy accounting. A steep yield curve will help banks earning operating profits with widened net interest margins, but the big money centers still are left holding the bag of toxic assets in their basement. I re-entered puts in a certain for-profit educator, and I think all the indices will correct here. This bear market rally has been powerful, but the market's only function is to take down as many suckers as possible. Too many retail investors are just now joining the bandwagon, and I suspect the majority of the move is now behind us. Let's hope the coming correction isn't a whopper.

I'm not a good trader, altho I'm gettng better at valuation, so please do your own due diligence, and good luck to all.